ARENA PHARMACEUTICALS, INC.

Transcription

1 ARENA PHARMACEUTICALS, INC. April 29, 2015 Dear Arena Stockholder: You are cordially invited to attend the 2015 Annual Meeting of Stockholders of Arena Pharmaceuticals, Inc., a Delaware corporation. The Annual Meeting will be held on Friday, June 12, 2015, at 9:00 a.m. (Pacific Time), at our offices located at 6154 Nancy Ridge Drive, San Diego, California I look forward to meeting with as many of our stockholders as possible. At the Annual Meeting, we will discuss each item of business described in the Notice of Annual Meeting of Stockholders and proxy statement. You will also have an opportunity to ask questions. If you would like directions to our offices, please visit our website at where you will find directions and a map locator under contact us. For further information about the Annual Meeting, please call and ask for Investor Relations. On behalf of our employees and Board of Directors, I would like to express our appreciation for your continued interest in Arena. Sincerely, Jack Lief President and Chief Executive Officer 6154 Nancy Ridge Drive, San Diego, CA 92121

2

3 Notice of Annual Meeting of Stockholders To be held on June 12, 2015 ARENA PHARMACEUTICALS, INC Nancy Ridge Drive San Diego, CA April 29, 2015 To the Stockholders of Arena Pharmaceuticals, Inc.: The Annual Meeting of Stockholders of Arena Pharmaceuticals, Inc., a Delaware corporation, will be held on Friday, June 12, 2015, at 9:00 a.m. (Pacific Time), at our offices located at 6154 Nancy Ridge Drive, San Diego, California 92121, for the following purposes, which are more fully described in the proxy statement accompanying this notice: 1. To elect the nine nominees for director named herein to our Board of Directors to serve until the next annual meeting of stockholders and until their respective successors are elected and qualified or until their earlier resignation or removal; 2. To approve the amendment and restatement of the Arena Pharmaceuticals, Inc., 2009 Employee Stock Purchase Plan, as amended, to, among other things, increase the number of shares of our common stock authorized and available for future issuance under the 2009 Employee Stock Purchase Plan, as amended, to a total of 1.5 million shares; 3. To approve, on an advisory basis, the compensation of our named executive officers, as disclosed in the proxy statement accompanying this notice; 4. To ratify the appointment of KPMG LLP, an independent registered public accounting firm, as our independent auditors for the fiscal year ending December 31, 2015; and 5. To transact such other business as may properly come before the meeting or any adjournment or postponement thereof. We have elected to provide access to our proxy materials over the Internet under the Securities and Exchange Commission s notice and access rules. On or about April 29, 2015, we mailed certain of our stockholders a Notice of Internet Availability of Proxy Materials, or Internet Notice, containing instructions on how to access our 2015 proxy statement and annual report and vote online. In addition, on or about April 29, 2015, we sent a printed copy of our proxy materials to our stockholders of record as of April 14, Our proxy statement and annual report are available on the home page of our website at Only stockholders of record at the close of business on April 14, 2015, are entitled to notice of and to vote at the Annual Meeting and at any adjournment or postponement thereof. Whether or not you expect to attend in person, we urge you to submit your proxy on the Internet or by telephone or, if applicable, complete, sign, date and return the enclosed proxy card at your earliest convenience. This will ensure the presence of a quorum at the meeting. Promptly submitting your vote will save us the expense and extra work of additional solicitation. If you received a printed copy of these materials by mail, you may return your proxy card in the enclosed envelope, which does not require postage if mailed in the United States. You may also vote on the Internet or by telephone pursuant to the instructions that accompanied your proxy card or were included in the Internet Notice. Sending in your proxy card or voting on the Internet or by telephone will not prevent you from voting at the Annual Meeting if you desire to do so, as your proxy may be cancelled at your option. Please note, however, that if your shares are held of record by a bank, broker or other agent and you wish to vote at the meeting, you must obtain a proxy issued in your name from that record holder. By Order of our Board of Directors Steven W. Spector Executive Vice President, General Counsel and Secretary

4

5 TABLE OF CONTENTS Page GENERAL INFORMATION... 1 Important Notice Regarding the Availability of Proxy Materials for the Stockholders Meeting to Be Held on June 12, Information Concerning Solicitation and Voting... 1 ELECTION OF DIRECTORS (PROPOSAL 1)... 7 Nominees and Election Process... 7 Business Experience of Nominees... 7 Director Independence Corporate Governance Guidelines Board Leadership Structure; Lead Independent Director Board s Role in Risk Oversight Annual Performance Evaluations; Assessment of Charters; Director Education Code of Business Conduct and Ethics Non-employee Director Meetings Director Meeting Attendance Term Limits Committees of the Board Stockholder Director Recommendations Stockholder Communications with our Board of Directors Compensation Committee Interlocks and Insider Participation Certain Relationships and Related Transactions APPROVAL OF AN AMENDMENT AND RESTATEMENT OF THE ARENA PHARMACEUTICALS, INC., 2009 EMPLOYEE STOCK PURCHASE PLAN, AS AMENDED (PROPOSAL 2) Description of the Amended 2009 ESPP New Plan Benefits (Amended 2009 ESPP Benefits) Plan Benefits (2009 ESPP Benefits) ADVISORY VOTE ON EXECUTIVE COMPENSATION (PROPOSAL 3) Compensation and Other Information Concerning Executive Officers, Directors and Certain Stockholders Security Ownership of Certain Beneficial Owners and Management Executive Officers Compensation Discussion and Analysis Executive Summary Compensation Philosophy, Objectives and Development Elements of Our Compensation Program Tax Considerations Additional Executive Compensation Practices, Policies and Procedures Compensation Committee Report Summary Compensation Table for Fiscal Years Ended December 31, 2014, 2013 and Grants of Plan-Based Awards During Fiscal Year Ended December 31, Outstanding Equity Awards at December 31, Option Exercises and Stock Vested During Fiscal Year Ended December 31, Nonqualified Deferred Compensation Table for Fiscal Year Ended December 31, Potential Post-Employment Payments Table at December 31, Director Compensation Director Compensation Table for Fiscal Year Ended December 31, Director Ownership Guidelines Audit Committee Audit Committee Report Independent Registered Public Accounting Firm Independent Auditors Fees Pre-approval Policies and Procedures... 53

6 RATIFICATION OF INDEPENDENT AUDITORS (PROPOSAL 4) Section 16(a) Beneficial Ownership Reporting Compliance Stockholder Proposals for the 2016 Annual Meeting Annual Report Annual Report on Form 10-K Householding of Proxy Materials Other Matters Arena Pharmaceuticals, Arena and our corporate logo are registered service marks of Arena. BELVIQ is a registered trademark of Arena Pharmaceuticals GmbH. In this proxy statement, Arena Pharmaceuticals, Arena, we, us and our refer to Arena Pharmaceuticals, Inc., unless the context otherwise provides. APD is an abbreviation for Arena Pharmaceuticals Development.

7 ARENA PHARMACEUTICALS, INC Nancy Ridge Drive San Diego, CA PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS To Be Held on Friday, June 12, 2015, at 9:00 a.m. (Pacific Time) GENERAL INFORMATION Important Notice Regarding the Availability of Proxy Materials for the Stockholders Meeting to Be Held on June 12, 2015 We have elected to provide access to our proxy materials over the Internet under the notice and access rules of the Securities and Exchange Commission, or SEC. On or about April 29, 2015, we mailed certain of our stockholders a Notice of Internet Availability of Proxy Materials, or Internet Notice, containing instructions on how to access our 2015 proxy statement and annual report and vote online. In addition, on or about April 29, 2015, we sent a printed copy of our proxy materials to our stockholders of record as of April 14, 2015, or Record Date. Our proxy statement and annual report are available on the home page of our website at Information Concerning Solicitation and Voting 1. Why am I receiving these materials? We have provided you these proxy materials because our Board of Directors is soliciting your proxy to vote at our 2015 Annual Meeting of Stockholders, or 2015 Annual Meeting, which is to be held on Friday, June 12, 2015, at 9:00 a.m. (Pacific Time), or at any adjournments or postponements thereof, for the purposes set forth in this proxy statement. You are invited to attend our 2015 Annual Meeting to vote on the proposals described in this proxy statement. However, you do not need to attend the meeting to vote your shares. If you have received a printed copy of these materials by mail, you may complete, sign and return the enclosed proxy card or follow the instructions below to submit your proxy on the Internet or by telephone. If you did not receive a printed copy of these materials by mail and are accessing them on the Internet, you may submit your proxy on the Internet or by telephone, as described below. 2. Why did I receive a Notice Regarding the Availability of Proxy Materials? In accordance with rules and regulations adopted by the SEC, we make our proxy materials available to our stockholders on the Internet. We are sending certain of our stockholders an Internet Notice. If you received the Internet Notice, such notice will instruct you how you may access and review all of the important information contained in the proxy materials. The Internet Notice also instructs you how you may submit your proxy on the Internet. If you would like to receive a printed copy of the proxy materials, including a proxy card, you should follow the instructions for requesting such materials included in the Internet Notice. 3. How can I attend our 2015 Annual Meeting? Our 2015 Annual Meeting will be held on Friday, June 12, 2015, at 9:00 a.m. (Pacific Time) at our offices located at 6154 Nancy Ridge Drive, San Diego, California Directions to our 2015 Annual Meeting may be found at where you will find a map locator under contact us. For further information about our 2015 Annual Meeting, please call and ask for Investor Relations. Information on how to vote in person at our 2015 Annual Meeting is described below. ARENA PHARMACEUTICALS, INC Proxy Statement 1

8 4. Who can vote at our 2015 Annual Meeting? Each person who owns or has the right to vote shares of our common stock as of the Record Date has the right to vote at our 2015 Annual Meeting. As of the Record Date, there were 242,035,538 shares of our common stock outstanding, and each of such shares is entitled to one vote. Stockholder of Record: Shares Registered in Your Name. If on the Record Date your shares of common stock were registered directly in your name with our transfer agent, Computershare, then you are a stockholder of record. As a stockholder of record, you may vote by proxy or vote in person at our 2015 Annual Meeting. Whether or not you plan to attend our 2015 Annual Meeting, we urge you to vote by proxy on the Internet or by telephone as instructed below or to complete, sign, date and return a proxy card to ensure your vote is counted. Beneficial Owner: Shares Registered in the Name of a Bank, Broker or Other Agent. If on the Record Date your shares of common stock were held in an account by a bank, broker or other agent, then you are the beneficial owner of shares held in street name and these proxy materials or the Internet Notice are being forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at our 2015 Annual Meeting. As a beneficial owner, you have the right to direct your bank, broker or other agent on how to vote the shares in your account. You are also invited to attend our 2015 Annual Meeting. However, since you are not the stockholder of record, you may not vote your shares in person at our 2015 Annual Meeting unless you obtain a legal proxy from your bank, broker or other agent. 5. What is a proxy? If you vote on the Internet or by telephone or return a signed and dated proxy card, you will be appointing Jack Lief, our President and Chief Executive Officer, and Steven W. Spector, our Executive Vice President, General Counsel and Secretary, as your representatives at our 2015 Annual Meeting and authorizing them, or each of them, to vote your shares at the meeting as indicated by you. This way, you can vote your shares whether or not you attend the meeting. 6. What am I voting on? We are asking you to vote on the following proposals: 1. Election of the nine nominees for director named herein to our Board of Directors to serve until the next annual meeting of stockholders and until their respective successors are elected and qualified or until their earlier resignation or removal; 2. Approval of the amendment and restatement of the Arena Pharmaceuticals, Inc., 2009 Employee Stock Purchase Plan, as amended, to, among other things, increase the number of shares of our common stock authorized and available for future issuance under the 2009 Employee Stock Purchase Plan, as amended, to a total of 1.5 million shares; 3. Advisory approval of the compensation of our named executive officers, as disclosed in this proxy statement in accordance with rules of the SEC; 4. Ratification of the appointment of KPMG LLP, an independent registered public accounting firm, as our independent auditors for the fiscal year ending December 31, 2015; and 5. Such other proposals as may properly come before the meeting or any adjournment or postponement thereof. 2 ARENA PHARMACEUTICALS, INC Proxy Statement

9 7. What if another matter is properly brought before our 2015 Annual Meeting? Our Board of Directors knows of no other matters that will be presented for consideration at our 2015 Annual Meeting. If any other matters are properly brought before our 2015 Annual Meeting, it is the intention of the persons named in the accompanying proxy to vote on those matters in accordance with their best judgment. 8. What if I return a proxy card or otherwise vote but do not make specific choices? If you vote on the Internet or by telephone or mark your voting instructions on the proxy card, your shares will be voted as you instruct, or in the best judgment of Mr. Lief or Mr. Spector if a new proposal comes up for a vote at our 2015 Annual Meeting. If you return a signed and dated proxy card or otherwise vote without marking voting selections, your shares will be voted as follows: FOR the nine named nominees as directors; FOR the approval of the amendment and restatement of the Arena Pharmaceuticals, Inc., 2009 Employee Stock Purchase Plan, as amended; FOR the approval, on an advisory basis, of the compensation of our named executive officers; FOR the ratification of the appointment of KPMG LLP as our independent auditors for the fiscal year ending December 31, 2015; and according to the best judgment of Mr. Lief or Mr. Spector if a proposal that is not on the proxy card comes up for a vote at our 2015 Annual Meeting. 9. How do I vote? Stockholder of Record: Shares Registered in Your Name. BY INTERNET: Please follow the vote by Internet instructions that are on your proxy card. If you vote by Internet, you do not have to mail in your proxy card. Your vote must be received by 11:00 p.m. (Pacific Time) on June 11, 2015, to be counted. BY TELEPHONE: Please follow the vote by telephone instructions that are on your proxy card. If you vote by telephone, you do not have to mail in your proxy card. Your vote must be received by 11:00 p.m. (Pacific Time) on June 11, 2015, to be counted. BY MAIL: If you have received a printed copy of these materials by mail, you may complete, sign and date your proxy card and mail it in the enclosed pre-addressed envelope, which does not require postage if mailed in the United States. Your vote must be received by 11:00 p.m. (Pacific Time) on June 11, 2015, to be counted. IN PERSON: We will pass out written ballots to anyone who wants to vote in person at our 2015 Annual Meeting. However, if you hold your shares in street name, you must obtain a legal proxy from your bank, broker or other agent to vote at our 2015 Annual Meeting. Beneficial Owner: Shares Registered in the Name of a Bank, Broker or Other Agent. If you are a beneficial owner of shares registered in the name of a bank, broker or other agent, you should have received the Internet Notice (or a proxy card and voting instructions with these proxy materials) from that organization rather than from us. Simply follow the instructions you received from that organization to vote on the Internet or, if you received a proxy card by mail, complete, sign and return the proxy card to ensure that your vote is counted. Please contact that organization if you did not receive the Internet Notice or such materials, as applicable. To vote in person at our 2015 Annual Meeting, you must obtain a legal proxy from your bank, broker or other agent. Follow the instructions from your bank, broker or other agent included with the Internet Notice or these proxy materials, or contact such agent to obtain a proxy form. Internet proxy voting may be provided to allow you to vote your shares online, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions. However, please be aware that you must bear any costs associated with your Internet access, such as usage charges from Internet access providers and telephone companies. ARENA PHARMACEUTICALS, INC Proxy Statement 3

10 10. What does it mean if I receive more than one Internet Notice or proxy card? It likely means that you hold our shares in multiple accounts at the transfer agent or with brokers or other custodians of your shares. Please follow the voting instructions included in each Internet Notice and proxy card you receive to ensure that all of your shares are voted. 11. Can I change my vote after submitting my proxy? Stockholder of Record: Shares Registered in Your Name. If you are a stockholder of record, you can revoke your proxy and change your vote at any time before the polls close at our 2015 Annual Meeting by: (i) voting on the Internet or by telephone by 11:00 p.m. (Pacific Time) on June 11, 2015 (your latest Internet or telephone vote is counted), (ii) signing a proxy card with a later date and returning it before the polls close at our 2015 Annual Meeting, (iii) returning a written notice before the polls close at our 2015 Annual Meeting that you are revoking your proxy, or (iv) voting at the meeting. Please note, however, that simply attending our 2015 Annual Meeting will not, by itself, revoke your proxy. Beneficial Owner: Shares Registered in the Name of a Bank, Broker or Other Agent. If you are a beneficial owner of shares registered in the name of a bank, broker or other agent, you should follow their instructions on how to change your vote. Please contact your bank, broker or other agent if you did not receive such instructions. 12. How many shares must be present to hold our 2015 Annual Meeting? To hold our 2015 Annual Meeting and conduct business, the holders of a majority of our outstanding common stock as of the Record Date must be present, either in person or represented by proxy, at our 2015 Annual Meeting. This is called a quorum. A stockholder s shares are counted towards a quorum if the stockholder either: is present at the meeting, or has properly submitted a proxy (including voting on the Internet or by telephone). Both abstentions and broker non-votes are counted as present for the purposes of determining the presence of a quorum at our 2015 Annual Meeting. 13. What are broker non-votes? Broker non-votes occur when a broker who holds shares for a stockholder in street name submits a proxy for those shares but does not vote. In general, this occurs when the broker has not received voting instructions from the stockholder, and the broker lacks discretionary voting authority under the rules of the New York Stock Exchange, or NYSE, or otherwise to vote the shares for a particular proposal. The bank, broker or other agent can register your shares as being present at a meeting for purposes of determining the presence of a quorum, but will not be able to vote on those items for which specific authorization is required under the rules of the NYSE. 14. When do brokers have discretionary voting authority to vote my shares without my instruction? If you are a beneficial owner whose shares are held of record by a bank, broker or other agent, such entity has discretionary voting authority, under the rules of the NYSE, to vote your shares on certain routine matters for which it does not receive voting instructions from you by the 10th day before the meeting. For example, such entity has discretionary voting authority with regard to the ratification of the appointment of KPMG LLP (Proposal 4). The election of directors (Proposal 1), the amendment and restatement of our 2009 Employee Stock Purchase Plan, as amended (Proposal 2), and the say-on-pay vote (Proposal 3) are not considered routine. When a proposal is not a routine matter and the entity holding the shares has not received voting instructions from the beneficial holder of the shares with respect to that proposal, the entity cannot vote the 4 ARENA PHARMACEUTICALS, INC Proxy Statement

11 shares on that proposal. Accordingly, it is important that beneficial owners instruct their brokers how they wish to vote their shares. 15. How many votes must the nominees receive to be elected as directors? Directors are elected by a plurality of votes of common stock present, either in person or represented by proxy, at our 2015 Annual Meeting and entitled to vote. This means that the nine nominees receiving the highest number of votes FOR election will be elected. Only votes FOR or WITHHELD will affect the outcome. 16. How many votes must be received to approve the amendment and restatement of the Arena Pharmaceuticals, Inc., 2009 Employee Stock Purchase Plan, as amended? A majority of the votes cast by stockholders entitled to vote on the proposal must vote FOR approval. Abstentions and broker non-votes will have no effect. 17. How many votes must be received to approve the compensation of our named executive officers, as disclosed in this proxy statement in accordance with SEC rules? A majority of the votes cast by stockholders entitled to vote on the proposal must vote FOR approval. Abstentions and broker non-votes will have no effect. 18. How many votes must be received to ratify the appointment of KPMG LLP as Arena s independent auditors for the fiscal year ending December 31, 2015? A majority of the votes cast by stockholders entitled to vote on the proposal must vote FOR ratification. Abstentions and broker non-votes will have no effect. 19. How are votes counted? Votes will be counted by the inspector or inspectors of election appointed for our 2015 Annual Meeting, who will separately count, for the proposal to elect directors, votes FOR and WITHHOLD and broker nonvotes; and, with respect to other proposals, votes FOR and AGAINST, proxies marked to ABSTAIN from voting, and broker non-votes. Abstentions and broker non-votes will have no effect and will not be counted towards the vote total for any proposal, but will be counted as present for the purposes of determining the presence of a quorum at our 2015 Annual Meeting. Our transfer agent, Computershare, will tabulate and certify the voting results. 20. Who will bear the cost of soliciting votes for our 2015 Annual Meeting? We are paying for the distribution and solicitation of the proxies. As a part of this process, we reimburse brokers, nominees, fiduciaries and other custodians for reasonable fees and expenses in forwarding proxy materials to our stockholders. Original solicitation of proxies by mail may be supplemented by other mailings, telephone calls, personal solicitation, or use of the Internet by our directors, officers, other employees or, if we choose to engage one, an independent proxy solicitation firm. No additional compensation will be paid to our directors, officers or other employees for such services, and in the event we engage such a proxy solicitation firm, the fees paid by us would not likely exceed $20, How can I find out the results of the voting at our 2015 Annual Meeting? Preliminary voting results will be announced at our 2015 Annual Meeting. In addition, final voting results will be published in a current report on Form 8-K that we expect to file within four business days after our 2015 Annual Meeting. If final voting results are not available to us in time to file a Form 8-K within four business days after our 2015 Annual Meeting, we intend to file a Form 8-K to publish preliminary results and, within four business days after the final results are known to us, file an additional Form 8-K to publish the final results. ARENA PHARMACEUTICALS, INC Proxy Statement 5

12 22. How can I obtain the company s corporate governance information? Our website is and we have included various corporate governance materials under the Investors tab. Included in such information are the charters of the following standing committees of our Board of Directors: the Audit Committee, the Compensation Committee, the Corporate Governance and Nominating Committee and the Science Committee. Also included under that tab are our Board of Directors Corporate Governance Guidelines, our Code of Business Conduct and Ethics and our Policy on Filing, Receipt and Treatment of Complaints. 6 ARENA PHARMACEUTICALS, INC Proxy Statement

13 ELECTION OF DIRECTORS (PROPOSAL 1) Nominees and Election Process The persons named in the table below are nominees for director at our 2015 Annual Meeting to serve until the next annual meeting of stockholders and until their respective successors are elected and qualified or until their earlier resignation or removal. Our Bylaws provide that the authorized number of directors shall be determined by a resolution of our Board of Directors. All of the nominees for director at our 2015 Annual Meeting were elected at our 2014 Annual Meeting of Stockholders and were recommended by the Corporate Governance and Nominating Committee for election to our Board of Directors at our 2015 Annual Meeting. Directors are elected by a plurality of votes of common stock present, either in person or represented by proxy, at the annual meeting and entitled to vote. Unless otherwise instructed to withhold a vote for a particular nominee or all of the nominees, the proxy holders will vote the proxies received by them for the nominees named below. In the event that any of these nominees is unavailable to serve as a director at the time of our 2015 Annual Meeting, the proxies will be voted for any substitute nominee who shall be designated by our Board of Directors, unless our Board reduces the number of directors. We have no reason to believe that any nominee will be unavailable to serve. Following is information, as of March 31, 2015, regarding the nominees for director at our 2015 Annual Meeting. Such information includes biographical and other information about the nominees, including information concerning the specific experience, qualifications, attributes or skills that led our Board of Directors and the Corporate Governance and Nominating Committee to conclude that the nominees should serve as our directors. Name Positions and Offices Held Year First Elected or Appointed Director Jack Lief... Director, President and Chief Executive Officer Dominic P. Behan, Ph.D., D.Sc... Director, Executive Vice President and Chief Scientific Officer Donald D. Belcher... Director Scott H. Bice... Director Harry F. Hixson, Jr., Ph.D.... Director Tina S. Nova, Ph.D.... Director Phillip M. Schneider... Director Christine A. White, M.D.... Director Randall E. Woods... Director Age Business Experience of Nominees Jack Lief is a co-founder of Arena and has served as a director and our President and Chief Executive Officer since April Mr. Lief also served as the Chairman of our Board of Directors from October 2007 to December Mr. Lief served as an advisor and consultant to numerous biopharmaceutical organizations from 1995 to April 1997; as Senior Vice President, Corporate Development and Secretary of Cephalon, Inc., a biopharmaceutical company, from 1989 to 1994; as Director of Business Development and Strategic Planning for Alpha Therapeutic Corporation, a manufacturer of biological products, from 1983 to 1989; and in various positions at Abbott Laboratories, a pharmaceutical company, from 1972 to 1983, most recently as the head of International Marketing Research. Mr. Lief serves as the Chairman of the board of directors of Mast Therapeutics, Inc., a biopharmaceutical company. Mr. Lief is also an Executive Board Member of BIOCOM, a life science association representing more than 650 member companies in Southern California, and was the Chair of the board of directors of BIOCOM from March 2005 to March Mr. Lief holds a B.A. from Rutgers University and an M.S. in Psychology (Experimental and Neurobiology) from Lehigh University. We believe that Mr. Lief s role as a co-founder, President and Chief Executive Officer of our company, combined with his extensive leadership, strategic planning, business, financial, and international ARENA PHARMACEUTICALS, INC Proxy Statement 7

14 pharmaceutical industry expertise, provides our Board of Directors with critical knowledge and in-depth insight into our strategic planning and operations and give him the qualifications, attributes and skills to serve as one of our directors. Dominic P. Behan, Ph.D., D.Sc., is a co-founder of Arena and has served as a director since April 2000 and as our Executive Vice President and Chief Scientific Officer since February Dr. Behan served as our Senior Vice President and Chief Scientific Officer from June 2004 to February 2012, and as our Vice President, Research from April 1997 to June Dr. Behan directed various research programs at Neurocrine Biosciences, Inc., a biopharmaceutical company, from 1993 to 1997, and was engaged in research at the Salk Institute, a non-profit research organization, from 1990 to Dr. Behan holds a B.Sc. in Biochemistry from Leeds University, England, and a Ph.D. in Biochemistry and a higher doctorate D.Sc. from the University of Reading, England. We believe that Dr. Behan s extensive scientific expertise, his role as a co-founder, Executive Vice President and Chief Scientific Officer of our company, and his leadership and scientific experience at other scientific and biopharmaceutical entities give him a deep understanding of pharmaceutical research and development and the qualifications, attributes and skills to serve as one of our directors. Donald D. Belcher has served as a member of our Board of Directors since December Mr. Belcher served as Chairman of the board of directors of Banta Corporation, a printing and supply-chain management company, from 1995 to 2004, Chief Executive Officer from 1995 to 2002 and President from 1994 to Mr. Belcher holds a B.A. from Dartmouth College and an M.B.A. from the Stanford University Graduate School of Business. We believe that Mr. Belcher s extensive leadership, business and financial expertise, including his background as a Chairman, Chief Executive Officer and President of a large, publicly held company, and his experience in marketing, global operations, international business, and strategic planning give him the qualifications, attributes and skills to serve as one of our directors. Scott H. Bice has served as a member of our Board of Directors since December Mr. Bice has been the Robert C. and Nanette T. Packard Professor at the University of Southern California Law School since 2000, where he served as Dean from 1980 to Mr. Bice has experience on several corporate boards, including Imagine Films, from 1992 to 1994; Western and Residence Mutual Insurance Companies, from 1996 to 2003; and Jenny Craig, from 1996 to Mr. Bice holds a B.S. in finance and a J.D. from the University of Southern California. We believe that Mr. Bice s extensive legal, corporate governance, and business ethics expertise, his background as a professor and former Dean of a leading law school, and his service on other boards, including for a company involved in developing and commercializing a weight-loss program, give him an important perspective to contribute and the qualifications, attributes and skills to serve as one of our directors. Harry F. Hixson, Jr., Ph.D., has served as a member of our Board of Directors since September Dr. Hixson served as the Chairman of the board of directors of Sequenom, Inc., a genomics company, from January 2003 to March 2015, and served as its Chief Executive Officer from September 2009 to June Dr. Hixson served as Chief Executive Officer of BrainCells Inc., a drug discovery and development company, from 2004 to 2005; as Chief Executive Officer of Elitra Pharmaceuticals Inc., a biopharmaceutical company, from 1998 to 2003; and in various management positions with Amgen Inc., a biopharmaceutical company, from 1985 to 1991, most recently as President and Chief Operating Officer. Within the past five years, Dr. Hixson also served as a member of the board of directors of NovaBay Pharmaceuticals, Inc., a biopharmaceutical company, and Infinity Pharmaceuticals, Inc., a biopharmaceutical company. Dr. Hixson holds a B.S. in Chemical Engineering from Purdue University, an M.B.A. from the University of Chicago and a Ph.D. in Physical Biochemistry from Purdue University. 8 ARENA PHARMACEUTICALS, INC Proxy Statement

15 We believe that Dr. Hixson s extensive leadership, business and scientific expertise, including his background in the development and commercialization of biopharmaceuticals in the United States and internationally, his senior management experience, including as President and Chief Operating Officer of a pioneering company in the biopharmaceutical industry, and his service on other boards give him the qualifications, attributes and skills to serve as one of our directors. Tina S. Nova, Ph.D., has served as a member of our Board of Directors since September Dr. Nova has served as Senior Vice President and General Manager of Illumina Inc. s oncology business unit since July Dr. Nova was a co-founder of Genoptix, Inc., a medical laboratory diagnostics company, and served as its President from 2000 to April Dr. Nova also served as the Chief Executive Officer of Genoptix and as a member of its board of directors from 2000 until Novartis AG acquired Genoptix in March Dr. Nova was a co-founder of Nanogen, Inc., a provider of molecular diagnostic tests, and she served as its Chief Operating Officer and President from 1994 to Dr. Nova served as Chief Operating Officer of Selective Genetics, a biotechnology company, from 1992 to 1994, and in various director-level positions with Ligand Pharmaceuticals Incorporated, a drug discovery and development company, from 1988 to 1992, most recently as Executive Director of New Leads Discovery. Dr. Nova has also held various research and management positions with Hybritech, Inc., a former subsidiary of Eli Lilly & Company, a pharmaceutical company. Within the past five years, Dr. Nova also served as a member of the board of directors of Adamis Pharmaceuticals Corporation, a biopharmaceutical company, NanoString Technologies, Inc., a provider of life science tools, and Cypress Biosciences, Inc., a pharmaceutical company. Dr. Nova was the Chair of the board of directors of BIOCOM, a life science association representing more than 650 member companies in Southern California, from March 2001 to March Dr. Nova holds a B.S. in Biological Sciences from the University of California, Irvine and a Ph.D. in Biochemistry from the University of California, Riverside. We believe that Dr. Nova s extensive leadership, business and scientific expertise, including her background of founding, financing, developing and operating companies in the healthcare industry, including her background as the President and Chief Executive Officer of a publicly held company in the healthcare industry, her experience in successfully developing, launching and commercializing medical products, and her service on other boards give her the qualifications, attributes and skills to serve as one of our directors. Phillip M. Schneider has served as a member of our Board of Directors since December Mr. Schneider held various positions with IDEC Pharmaceuticals Corporation, a biopharmaceutical company, from 1987 to 2002, most recently as Senior Vice President and Chief Financial Officer. Prior to his association with IDEC, Mr. Schneider held various management positions at Syntex Pharmaceuticals Corporation and was previously with KPMG LLP. Mr. Schneider serves as a member of the board of directors of Auspex Pharmaceuticals, Inc., a biopharmaceutical company, and Pfenex Inc., a biopharmaceutical company. Within the past five years, Mr. Schneider also served as a member of the board of directors of Gen-Probe Incorporated, a medical diagnostics company. Mr. Schneider holds a B.S. in Biochemistry from the University of California, Davis and an M.B.A. from the University of Southern California. We believe that Mr. Schneider s extensive leadership, business, financial and accounting expertise, including his background as the Chief Financial Officer of a publicly held biopharmaceutical company during the successful development, launch and commercialization of its first product, his experience at a large financial and accounting firm, and his service on other boards in our industry give him an important financial and accounting perspective and the qualifications, attributes and skills to serve as one of our directors. Christine A. White, M.D., has served as a member of our Board of Directors since August Dr. White served in various senior positions with Biogen Idec Inc., a biopharmaceutical company, from 1996 to 2005, most recently as Senior Vice President, Global Medical Affairs; as the Director of Clinical Oncology Research at the Sidney Kimmel Cancer Center in San Diego from 1994 to 1996; and on the clinical staff and in various positions in the Department of Medicine at Scripps Memorial Hospitals in La Jolla and Encinitas, ARENA PHARMACEUTICALS, INC Proxy Statement 9

16 California, from 1984 to 1994, most recently as Chairman, Department of Medicine. Dr. White serves as lead director on the board of directors of MEI Pharma, Inc., an oncology company. Dr. White holds a B.A. in Biology and an M.D. from the University of Chicago and is Board certified in both Internal Medicine and Medical Oncology. We believe that Dr. White s extensive medical, scientific and business expertise, including her background in the clinical practice of medicine, basic science and clinical research, clinical development and regulatory affairs, her experience with the successful development, launch and commercialization of medicinal products, her senior management experience at a publicly held company in our industry, and her service on other boards give her a deep understanding of pharmaceutical development and commercialization and the qualifications, attributes and skills to serve as one of our directors. Randall E. Woods has served as a member of our Board of Directors since December Mr. Woods has served as the President and Chief Executive Officer of Sophiris Bio Inc., a urology company, since August 2012, and as a member of its board of directors since October Mr. Woods served as the President and Chief Executive Officer and a member of the board of directors of Sequel Pharmaceuticals, Inc., a pharmaceutical company, from September 2007 to June 2011; as the President and Chief Executive Officer of NovaCardia, Inc., a pharmaceutical company that was acquired by Merck & Co., Inc., from April 2004 to September 2007; as the President and Chief Executive Officer of Corvas International, Inc., a biopharmaceutical company, from 1996 to 2003; in various senior positions at Boehringer Mannheim s US pharmaceutical operations, from 1993 to 1996, most recently as President; and before then served more than 20 years at Eli Lilly & Company in sales and marketing positions. Mr. Woods is the chairman emeritus of the advisory board of the University of California, San Diego s Sulpizio Cardiovascular Center. Mr. Woods was the Chair of the board of directors of BIOCOM, a life science association representing more than 650 member companies in Southern California, for Mr. Woods holds a B.S. in Biology and Chemistry from Ball State University and an M.B.A. from Western Michigan University. We believe that Mr. Woods extensive leadership, business and financial expertise, including his background of founding, financing and developing companies in our industry, and his senior management experience, including as Chief Executive Officer and President of multiple biopharmaceutical companies, his background in sales, marketing and pharmaceutical operations, and his service on other boards give him the qualifications, attributes and skills to serve as one of our directors. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR EACH NAMED NOMINEE. Director Independence Our common stock is listed on the NASDAQ Global Select Market, which requires that a majority of a listed company s board of directors qualify as independent under the applicable NASDAQ listing standards. The board of directors must affirmatively make this determination. In addition, under our Corporate Governance Guidelines, it is our policy that at least two-thirds of the members of our Board of Directors be independent directors. Our Board of Directors consults with its legal advisors to ensure that its independence determinations, including with respect to directors, director nominees and members of its committees, comply with all applicable securities and other laws and regulations regarding the definition of independent, including but not limited to those set forth in pertinent listing standards of NASDAQ, as in effect from time to time. Consistent with these considerations, our Board of Directors has reviewed relevant transactions and relationships between each nonemployee director and Arena, other non-employee directors, our senior management and our independent auditors and has affirmatively determined that all of our non-employee directors are independent directors under the applicable NASDAQ listing standards. 10 ARENA PHARMACEUTICALS, INC Proxy Statement

17 Under our Corporate Governance Guidelines, directors who have been deemed independent directors by our Board of Directors will inform the lead independent director in writing if he or she believes there has been a change in his or her status as an independent director. The lead independent director, in turn, will advise the Corporate Governance and Nominating Committee of such potential change of status so that the committee, with the aid of the lead independent director, can determine whether the director continues to qualify as an independent director and whether to recommend to our full Board of Directors to ask for the resignation of such director. Corporate Governance Guidelines Our Board of Directors has adopted Corporate Governance Guidelines for the conduct and operation of our Board. The guidelines cover such topics as board composition and selection, the board s role, director orientation and education, director compensation, board meetings, board committees, board access to management and use of outside advisors, succession planning, and the evaluation of the board and our Chief Executive Officer. Board Leadership Structure; Lead Independent Director Our Board of Directors believes that there is no single, generally accepted approach to providing board leadership and that, given the dynamic and competitive environment in which we operate, the appropriate board leadership structure may vary as circumstances change. As such, our Board of Directors periodically reviews its leadership structure to confirm that it is an appropriate structure for our company at such time. Our Chief Executive Officer is a member of our Board of Directors, but does not act as its chair. Our Board of Directors has a lead independent director who serves as the chair of Board meetings, including during executive sessions of independent directors. In addition to serving as chair, the lead independent director s responsibilities and authority includes the following: Establishing the schedule and agenda for Board meetings and approving information to be sent to our Board; Preside over any portion of Board meetings at which the performance of our Board is presented or discussed; Establishing the agenda for meetings of the independent directors and presiding over such meetings; Coordinating with the committee chairs, as needed, regarding meeting agendas, informational requirements and other matters, as appropriate; Being available for communications with stockholders, as appropriate and in accordance with our policy on stockholder communications with our Board; and Performing such other duties as our Board may establish or delegate. The lead independent director is elected by our independent directors to serve for a minimum of one year or until replaced by the independent directors. It is generally expected that the lead independent director will serve for more than a year, and Dr. White has been our lead independent director since November Our Board of Directors believes that this structure provides an efficient and effective leadership model for our company at this time. In considering its leadership structure, our Board of Directors has taken into account that it consists of a substantial majority of independent directors who are highly qualified and experienced, has a lead independent director with defined corporate governance responsibilities, the Board s Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee are each comprised entirely of independent directors, and that it has regular interactions outside of Board and committee meetings with our management, including our Chief Executive Officer. Our Board of Directors believes that we have an appropriate balance between the authority of those who oversee our company and those who manage it on a day-to-day basis. ARENA PHARMACEUTICALS, INC Proxy Statement 11

18 Board s Role in Risk Oversight Our management has the primary responsibility for identifying and managing our business risks, including by overseeing and implementing our enterprise risk management program. Our Board of Directors actively oversees potential risks and our risk management activities, including by discussing with management our risks and the management of such risks at meetings of the Board and its committees. Our Board of Directors also makes use of the independent understanding and knowledge of many of such risks possessed by our directors. Our Board of Directors regularly reviews our corporate strategy in light of the evolving nature of such risks and makes adjustments to that strategy when appropriate. Our Board of Directors also regularly considers risks facing us when it approves the annual budget, plan and corporate goals and throughout the year as it monitors developments and reviews our financial and other periodic reports. Our Board of Directors has also delegated risk oversight to each of its standing committees within their areas of responsibility. The Audit Committee assists our Board of Directors in its risk oversight function with regard to, among other things, our internal control over financial reporting, periodic filings with the SEC, investment policy, procedures relating to the receipt and treatment of complaints, and policies and procedures designed to ensure adherence to applicable laws and regulations. The Compensation Committee assists our Board of Directors in its risk oversight function with regard to, among other things, assessing risk created by current and proposed compensation policies and practices for all of our employees. The Corporate Governance and Nominating Committee assists our Board of Directors in its risk oversight function with regard to, among other things, our management succession plans, the agendas for our Board s strategy sessions, and our compliancerelated policies and practices that are not within the purview of the Audit Committee or are referred to the committee by our Board. The Science Committee reviews our strategies and activities for research and development, and communicates to our Board risks associated with our projects, programs and technologies. We have assessed our compensation policies and practices on a company-wide basis to determine if such programs or practices create undesirable or unintentional risks of a material nature. Based on such assessment, we concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on our company. Annual Performance Evaluations; Assessment of Charters; Director Education Our Board of Directors, as well as each of its standing committees, conducts an annual self-evaluation, which includes a review of its performance and, in the case of each of the committees, an assessment of the adequacy and appropriateness of its charter. Our Board of Directors also reviews each of our directors. The Corporate Governance and Nominating Committee is responsible for overseeing this evaluation process, evaluating all standing committees and their charters and recommending to our Board of Directors any changes to our Board and the authority, charters, compositions and chairs of such committees. Each director is expected to maintain the necessary level of expertise to perform his or her responsibilities as a director. At least twice per year, our Board of Directors devotes at least one hour during regularly scheduled board meetings to director training on recent developments in legal standards related to corporate governance, disclosure obligations or industry-specific issues. In addition, we may, from time to time and depending on the circumstances, pay for all or a portion of outside continuing education programs to assist our directors in maintaining such level of expertise. It is our Board of Directors policy for us to reimburse each director for attending one of such continuing education programs per year (and, when possible, for such cost to be shared if the director is a member of more than one board of directors). Code of Business Conduct and Ethics Our Board of Directors has adopted a Code of Business Conduct and Ethics that applies to our directors and employees (including our principal executive officer, principal financial officer, principal accounting officer and controller), and we have posted the text of the policy on our website ( under Investors Corporate Governance. To facilitate compliance with this policy, we periodically conduct a 12 ARENA PHARMACEUTICALS, INC Proxy Statement

19 program of awareness, training and review. The Code of Business Conduct and Ethics complies with the applicable NASDAQ listing standards and SEC rules and regulations, and includes procedures for (i) the filing, receipt and treatment of complaints regarding suspected improper conduct by our employees, directors, collaborators, vendors and others associated with us and (ii) the confidential, anonymous submission by employees of concerns regarding any matter covered by the policy. In addition, we intend to promptly disclose on our website in the future (i) the date and nature of any amendment (other than technical, administrative or other non-substantive amendments) to the policy that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions and relates to any element of the code of ethics definition enumerated in Item 406(b) of Regulation S-K, and (ii) the nature of any waiver, including an implicit waiver, from a provision of the policy that is granted to one of these specified individuals that relates to one or more of the elements of the code of ethics definition enumerated in Item 406(b) of Regulation S-K, the name of such person who is granted the waiver and the date of the waiver. Non-employee Director Meetings Our independent directors meet in regularly scheduled executive sessions without management. These executive sessions occur in conjunction with regularly scheduled meetings of our Board of Directors and its standing committees and otherwise as needed. Director Meeting Attendance Our Board of Directors held seven meetings during the fiscal year ended December 31, Each incumbent director attended at least 75% of the aggregate of the total number of meetings of our Board of Directors and the total number of meetings held by all committees of our Board on which such director served, in each case during the periods in which he or she served. In addition to regularly scheduled meetings, the directors participate in telephone interactions, including telephone calls among the independent directors and Mr. Lief, and other communications with each other and certain of our officers, as well as with our independent auditors and external advisors, such as legal counsel, consultants and investment bankers. As stated in our Corporate Governance Guidelines, our directors are encouraged to attend our annual meetings of stockholders, and all of our directors attended our 2014 Annual Meeting of Stockholders. Term Limits Under our Corporate Governance Guidelines, independent directors serving on our Board of Directors as of December 29, 2011, are not to serve more than a total of 16 years. Independent directors who are elected to our Board of Directors after December 29, 2011, are not to serve more than a total of 10 years; provided, however, that if our Board determines, in anticipation of the 10-year term limit of an independent director elected after December 29, 2011, that such new director should continue to serve on our Board, then the 16-year term limit shall apply. Our Board of Directors does not believe it should further limit the number of terms for which an individual may serve as a director. Directors who have served on our Board of Directors for an extended period of time are able to provide continuity and valuable insight into our company, our operations and prospects based on their experience with, and understanding of, our history, policies and objectives. Our Board of Directors believes that, as an alternative to further limiting the number of terms, it can ensure that our Board continues to evolve and adopt new ideas and viewpoints through the director nomination process, through periodic rotation of committee assignments and through the above term limits. Committees of the Board The standing committees of our Board of Directors are the Audit Committee, the Compensation Committee, the Corporate Governance and Nominating Committee and the Science Committee. Each of these ARENA PHARMACEUTICALS, INC Proxy Statement 13

20 committees is comprised entirely of independent directors under the applicable NASDAQ listing standards, with the exception that our Chief Scientific Officer is a member of the Science Committee. The members and chairs of our Board of Directors committees are appointed by our Board and may change in the future. Our Board of Directors has no set policy for rotation of committee members or chairs, but it annually reviews committee composition and chair positions, seeking the appropriate blend of continuity and fresh perspectives on the committees. The authority and responsibility of each of these committees are summarized below, and more detailed descriptions of their functions are included in their written charters, which are available on our website at Pursuant to their charters, each of the Audit Committee, the Compensation Committee, the Corporate Governance and Nominating Committee and Science Committee is authorized to access, at our expense, such internal and external resources as the particular committee deems necessary or appropriate to fulfill its defined responsibilities. Each committee has sole authority to approve fees, costs and other terms of engagement of such outside resources. Below is a chart showing the composition of the Audit Committee, the Compensation Committee, the Corporate Governance and Nominating Committee and the Science Committee as of March 31, Member Dominic P. Behan, Ph.D., D.Sc. Audit Committee Compensation Committee Corporate Governance and Nominating Committee Science Committee Donald D. Belcher Scott H. Bice Harry F. Hixson, Jr., Ph.D. Tina S. Nova, Ph.D. Phillip M. Schneider Christine A. White, M.D. Randall E. Woods = Committee member = Committee chair Audit Committee The Audit Committee s responsibilities include: selecting and evaluating the performance of our independent auditors; reviewing the scope of the audit to be conducted by our independent auditors, as well as the results of their audit, and approving audit and non-audit services to be provided by them; reviewing and assessing our financial reporting activities and disclosure, including our financial results press releases and periodic reports, and the accounting standards and principles followed; reviewing the scope, adequacy and effectiveness of our internal control over financial reporting; reviewing management s assessment of our compliance with our disclosure controls and procedures; reviewing our public disclosure policies and procedures; reviewing our guidelines and policies with respect to risk assessment and management, our tax strategy and our investment policy; reviewing and approving related-party transactions; 14 ARENA PHARMACEUTICALS, INC Proxy Statement